1) The success of the Affordable Care Act is partly based on how many young people signed up – As of February, 27 percent of enrollees selecting a marketplace plan are under age 35. Are you worried that premiums will go up next year because not enough young people have signed up?
No. To the extent premiums rise next year, it will be because of health care inflation, not the number of young people in the exchange. Let’s remember that from 2000 to 2009, premiums went up 84% with no exchanges. The key for the future is not to eradicate premium increases entirely; it is to make sure they aren't excessive.
The whole issue of “young invincibles” in the exchanges is a bit of a red herring. The important factor is health, not age. About 10% of people use about 67% of all health care resources. Thus in order for the exchanges to be viable, they need to include enough healthy people to balance the 10% who might need a lot of medical services. Young age is only a proxy for good health. There are plenty of 40 year olds who are just as healthy as the typical 25 year old.
We can expect the proportion of young enrollees to increase as the final data are tallied because we know from Massachusetts that young people tend to be among the last to enroll. But even if the 27% figure doesn’t budge, premiums in the exchange will be stable. The insurance companies expected the percentage of young people to be in the high 20s or low 30s. As the CEO of Aetna indicated, they are more than happy with the age distribution of enrollments so far.
Furthermore, since there was uncertainty about who would enroll in the first few years of the exchanges, the ACA built in protections, such as risk adjustment, risk corridors, and reinsurance, to protect insurance companies who might have too many high cost enrollees. Companies that disproportionately enroll young and healthy people have to compensate companies that disproportionately enroll older and sicker people, which levels the playing field and guards against cherry picking.
For all these reasons, I’m really not worried about the percentage of young invincibles enrolled for year one. The exchanges are stable. Premiums are likely to rise a little but not excessively.
2) Will all those who did not sign up for health insurance be penalized? Will we see the IRS pursuing people who don’t pay penalties?
Funny, the Republicans said such modest penalties were not enough to get people to sign up. I guess 7.1 million people did not agree.
If you don’t sign up for health insurance you will be penalized. The penalties phase in slowly, so they are only $95 or 1% of income (whichever is higher initially) but rise to $695 per adult or 2.5% of income by 2016. But they will be and should be enforced.
3) Should the government disclose how many have started to pay premiums?
They already have. This is not a mystery. The latest data show that between 80 and 85% of enrollees nationwide have started to pay premiums. In Connecticut, it’s actually 92% at last count. And it will rise as insurance companies and exchanges contact people to remind them to pay the premium. Refusal to pay is another red herring issue.
Close to 3 million individuals bought policies in the last month of open enrollment, and some of those policies don’t start until May. People are signing up for coverage because they really want health insurance. And they understand they need to pay their premiums in order to get that coverage.
4) What’s the next test for the law now that the enrollment period is up?
The ACA is designed to improve a $3 trillion sector of our economy. So there will be many “next tests.” It is a never-ending process. Companies that launch e-commerce web sites don’t just put them up and walk away. They require constant attention. The same is true for healthcare.gov and the state exchange web sites.
The two biggest “to-do’s” are to improve the exchanges and concentrate on implementing more cost control measures.
The administration pulled off an incredible feat fixing the website as quickly as they did and exceeding the CBO enrollment projection. But the victory cannot make them complacent. That would be a huge mistake. I would like to see a private-sector style management structure erected to run the federal exchanges, complete with a CEO who has experience in the health insurance industry, and a tech savvy team of e-commerce veterans. Going forward, the exchanges should look like Zappos or REI. That means they need to have a relentless focus on customer service and improving the user experience—reducing the shopping time to 30 minutes, having less than 1 minute wait times for answers from the call center, better tools to help people compare insurance plans, etc.
The second test is sustaining the slowdown in health care inflation. For the past three years, health care has grown at roughly the same rate as the economy overall, which is an historic achievement. The ACA has helped by reducing excessive prices for Medicare managed care plans, home health care agencies, and hospitals. We need to keep this going but we also have to begin transforming how we deliver care. That requires changing the way we pay doctors so that we reward value, not volume. We need to give doctors the right tools and incentives to redesign care so that they keep people healthy, not simply care for them when they are sick.
5) Polling data shows this law is unpopular. Will the fact the White House hit their 7 million target mean Democrats will stop being afraid to be associated with the President and the law in the mid-terms?
I am not the political brother. I do not know how this achievement will influence races in individual states. Let’s just say it is a victory for health reform and it indicates there is plenty of pent up demand for health insurance across the country.
6) Republicans have constantly been trying to amend and repeal the law. Are any of their alternatives plans viable?
Let’s be serious: There has never been a Republican replacement plan. Every plan that Republicans put out, such as the most recent Coburn-Burr-Hatch plan, disappears within 24 hours. They do not comprehensively address cost, quality and access. And when you analyze them just a little bit, it turns out they would significantly increase costs for average Americans. As I pointed out in the New York Times a few months ago, the Coburn-Burr-Hatch plan would have increased costs over $1400 for the average family without guaranteeing coverage for people with pre-existing conditions or improving quality.
The problem for Republicans is that the Affordable Care Act is their health care reform. It adopts a market-based approach—creating exchanges in which private sector health insurance companies compete to offer the best products and individual Americans decide what plan they want. Sounds pretty Republican to me. But if they aren’t happy with the ACA, and they think they can craft another market-based reform that can pass both houses of Congress, they are welcome to do so. I’d be interested to see what they come up with.
7) The US still spends more than two and a half times more than the average for developed countries on healthcare. Will the Affordable Health Care act do anything to reduce this?
The Affordable Care Act is already doing a lot. For the last 3 years health care cost growth has dramatically slowed and is just about even with growth in the economy. Some of this is due to lingering effects of the recession in 2008. But a part of it is undoubtedly due to the ACA. The ACA reduced excessive prices for Medicare managed care plans, home health care agencies, and hospitals. It has also begun to incentivize changes in how care is delivered. Accountable Care Organizations (ACOs) are groups of physicians and hospitals that provide coordinated care to patients. They are incentivized to reduce wasteful tests and treatments and deliver high-quality, lower cost care. There are over 400 ACOs; some working with Medicare and some with private insurance companies. Many are making tremendous strides in driving efficiency in medicine. As we learn the “secret sauce” to high quality-lower cost care, those lessons will spread.
In addition, the ACA creates new incentives for hospitals to reduce costly errors and duplication. The 30-day hospital readmission rate for Medicare patients was over 19% in 2009. Since the ACA began penalizing hospitals that fail to reduce readmissions, that number has dropped below 18%. That translates in to billions in savings. And in 2015, similar penalties will be imposed on hospitals that fail to lower preventable infections.
Make no mistake; more will have to be done. But the ACA has made a good start in helping with cost control.
8) The health website was riddled with glitches in the beginning, and still had issues even until the last day of enrollment. How should the federal government fix their Web infrastructure issues with the law?
The health insurance exchanges aren’t just a new federal program or a website; they are a giant tech start-up. They need to be operated as such. Luckily, there are plenty of good examples of how to run a successful, start-up-like exchange. Probably the best example is the exchange in Connecticut. It starts with bringing in the right people and empowering them to succeed. In Connecticut, they hired a CEO with insurance experience and surrounded him with other C-suite executives with tech experience. They also instilled a culture of entrepreneurialism that led to the creation of avatars and apps, they kept their web developers on a very short leash, and they created feedback loops designed to identify and fix problems quickly. Nearly everything that was done in Connecticut can be done at the federal level. This isn’t rocket science—and I’d be very surprised if open enrollment wasn’t smoother in November 2014.
9) There’s a lot of talk about improving the law, what do you think needs to be done to make it better?
In my book Reinventing American Health Care, I lay out a strategy for what I call Health Care Reform 2.0. We are reforming a $3 trillion industry—almost 20% of the economy—and we need to constantly be thinking about how to improve it. Here is a short list of to-do items:
- Raise the cigarette tax 50 cents per package. This will lower smoking rates by 15-20%. And that will have a huge impact—preventing lung diseases such as asthma and emphysema as well as lung and other cancers. This is something both Democrats and Republicans should be able to get behind; it’s a good to promote health and CBO has shown it would be a money saver.
- More competitive bidding. Nobody wants the government setting prices in health care. The ACA required competitive bidding for wheel chairs, oxygen equipment, hospital beds at home and other items. The early efforts have reduced prices for these items by roughly 40%, saving Medicare and seniors billions. We should expand competitive bidding to more health care goods and services. Why not bid out laboratory tests and X-rays, too? And let’s get a committee of private sector procurement specialists to run the competitive bidding process.
- More administrative simplification. No one likes paperwork. The ACA contained provisions to encourage the use of electronic claims and payment. But it did not go far enough. Physicians and hospitals should be required to transmit health information and bill insurers electronically, and all quality measures and credentialing should be electronic as well. And we should create a new position in the executive branch whose sole job it is to try to simplify and eliminate health care paperwork—and thus save a lot of money.
- More payment reform. We need to push Medicare harder to change how it pays for health care. One of the biggest cost drivers in the U.S. health care system is the fee-for-service payment system that rewards physicians for ordering more tests and treatments and making mistakes that require more services. We need to shift off the fee-for-service system in an orderly way. The government needs to establish a timeline so everyone knows the change. Next it needs to implement alternatives to fee-for-service that already work. There is a program that pays bundled payments for orthopedic and cardiac procedures that has shown to improve quality and save some money. Let’s roll that out over the next few years to more and more physicians. Then let’s start creating bundles for expensive diseases like cancer. Getting more payment reform fast is key.
10) The president and his team went everywhere to market the ACA – even doing “Between Two Ferns” and talking to writers to have them insert “get signed up” lines in their TV shows and movies. Your brother is in the entertainment business, was this proof that Hollywood is a liberal town?
I am not the Hollywood brother either. But I think this makes no sense. There are lots of people in Hollywood who aren’t Democrats. That is just superficial. Just like the media being liberal. Ever hear of Fox?